x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: September 30, 2013 | |
OR | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
Florida | 27-1739487 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
2515 McKinney Avenue, Suite 900 Dallas, TX | 75201 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | o | Accelerated filer | x |
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | o |
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2 |
Financial Statements |
September 30, 2013 | May 31, 2013 | June 30, 2013 | ||||||||||
(unaudited) | (unaudited) | |||||||||||
ASSETS | ||||||||||||
Current Assets: | ||||||||||||
Cash and cash equivalents | $ | 3,709 | $ | 1,112 | $ | 456 | ||||||
Accounts receivable – oil and natural gas sales | 3,790 | 3,522 | 4,673 | |||||||||
Accounts receivable – joint interest | 412 | 2,604 | 1,666 | |||||||||
Debt issuance costs | 230 | 230 | 230 | |||||||||
Prepaid expenses and other current assets | 408 | 420 | 400 | |||||||||
Commodities derivative asset – current | - | 190 | 86 | |||||||||
Deferred tax asset – current | 93 | 299 | 299 | |||||||||
Total current assets | 8,642 | 8,377 | 7,810 | |||||||||
Long-Term Investments: | ||||||||||||
Debentures – held to maturity | 4,279 | 4,279 | 4,279 | |||||||||
Oil and Natural Gas Properties, Successful Efforts Method: | ||||||||||||
Proved properties | 66,018 | 63,891 | 64,539 | |||||||||
Unproved properties | 19,659 | 19,539 | 19,622 | |||||||||
Other property and equipment | 1,132 | 1,026 | 1,061 | |||||||||
Less accumulated depreciation, depletion, amortization and impairment | (12,073 | ) | (9,324 | ) | (9,987 | ) | ||||||
Oil and natural gas properties, net | 74,736 | 75,132 | 75,235 | |||||||||
Other Assets: | ||||||||||||
Commodities derivative asset, net of current portion | 4 | 75 | 46 | |||||||||
Restricted cash, long-term | 464 | 452 | 452 | |||||||||
Debt issuance costs, net of current portion | 1,789 | 450 | 409 | |||||||||
Security deposit and other assets | 29 | 465 | 791 | |||||||||
Total Assets | $ | 89,943 | $ | 89,230 | $ | 89,022 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current Liabilities: | ||||||||||||
Accounts payable | $ | 3,037 | $ | 9,354 | $ | 9,318 | ||||||
Revenues payable | 2,686 | 774 | 1,137 | |||||||||
Accrued expenses | 819 | 1,137 | 1,175 | |||||||||
Commodities derivative liability | 122 | 34 | - | |||||||||
Convertible notes payable, net of discount of $69, $442, and $352, respectively | 1,431 | 3,308 | 3,398 | |||||||||
Notes payable – current | - | 500 | 500 | |||||||||
Asset retirement obligation – current | 228 | 228 | 228 | |||||||||
Environmental remediation liability – current | 1,400 | 1,400 | 1,400 | |||||||||
Total current liabilities | 9,723 | 16,735 | 17,156 | |||||||||
Long-Term Liabilities: | ||||||||||||
Line of credit, net of current portion | 14,800 | 19,800 | 19,800 | |||||||||
Mandatorily redeemable preferred stock and accrued dividends, net of discount of $3.5 million, $0.0001 par value; 1,200,000 shares authorized; 476,687 shares issued and 354,463 outstanding | 8,600 | - | - | |||||||||
Environmental remediation liability, net of current portion | 687 | 688 | 688 | |||||||||
Deferred tax liability – long-term | 93 | 299 | 299 | |||||||||
Asset retirement obligation, net of current portion | 4,882 | 4,751 | 4,792 | |||||||||
Total long-term liabilities | 29,062 | 25,538 | 25,579 | |||||||||
Total Liabilities | 38,785 | 42,273 | 42,735 | |||||||||
Commitments and Contingencies (Note 10) | ||||||||||||
Stockholders’ Equity: | ||||||||||||
Common stock, $0.00001 par value; 500,000 shares authorized; 133,347 shares issued and 133,140 outstanding as of September 30, 2013; 126,918 shares issued and 125,962 shares outstanding as of May 31, 2013; 126,918 shares issued and 125,962 shares outstanding as of June 30, 2013 | 1 | 1 | 1 | |||||||||
Noncontrolling interest | 5,710 | 5,603 | 5,564 | |||||||||
Additional paid-in capital | 71,536 | 65,536 | 65,536 | |||||||||
Accumulated deficit | (26,089 | ) | (24,183 | ) | (24,814 | ) | ||||||
Total stockholders’ equity | 51,158 | 46,957 | 46,287 | |||||||||
Total Liabilities and Stockholders’ Equity | $ | 89,943 | $ | 89,230 | $ | 89,022 |
3 |
Three Months Ended September 30, | Three Months Ended August 31, | One Month Ended June 30, | ||||||||||
2013 | 2012 | 2013 | ||||||||||
Revenue: | ||||||||||||
Oil and natural gas sales | $ | 5,774 | $ | 1,346 | $ | 1,716 | ||||||
Operating Expenses: | ||||||||||||
Exploration expense | 101 | 19 | 30 | |||||||||
Production taxes | 606 | 85 | 128 | |||||||||
Lease operating expenses | 747 | 366 | 634 | |||||||||
Natural gas transportation and marketing expenses | 38 | 23 | 50 | |||||||||
Depreciation, depletion, amortization and impairment | 2,091 | 1,406 | 665 | |||||||||
Accretion of discount on asset retirement obligation | 67 | 15 | 22 | |||||||||
General and administrative expense | 1,942 | 2,653 | 529 | |||||||||
Total operating expenses | 5,592 | 4,567 | 2,058 | |||||||||
Income (Loss) from Operations | 182 | (3,221 | ) | (342 | ) | |||||||
Other Income (Expense): | ||||||||||||
Unrealized gain on investment in Cross Border Resources, Inc. warrants | - | 230 | - | |||||||||
Equity in earnings of Cross Border Resources, Inc. | - | 11 | - | |||||||||
Interest expense | (927 | ) | (681 | ) | (225 | ) | ||||||
Unrealized loss on debentures | - | (48 | ) | - | ||||||||
Unrealized loss on commodity derivatives | (296 | ) | - | (90 | ) | |||||||
Realized loss on commodity derivatives | (88 | ) | - | (14 | ) | |||||||
Total Other Expense | (1,311 | ) | (488 | ) | (329 | ) | ||||||
Loss Before Income Taxes | (1,129 | ) | (3,709 | ) | (671 | ) | ||||||
Income tax provision | - | - | - | |||||||||
Net income (loss) | (1,129 | ) | (3,709 | ) | (671 | ) | ||||||
Net income (loss) attributable to noncontrolling interest | 146 | - | (40 | ) | ||||||||
Net loss attributable to Red Mountain Resources, Inc | $ | (1,275 | ) | $ | (3,709 | ) | $ | (631 | ) | |||
Basic and diluted net loss per common share | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.00 | ) | |||
Basic and diluted weighted average common shares outstanding | 129,224 | 87,574 | 126,918 |
4 |
Three Months Ended September 30, | Three Months Ended August 31, | One Month Ended June 30, | ||||||||||
2013 | 2012 | 2013 | ||||||||||
Cash Flow From Operating Activities: | ||||||||||||
Net loss | $ | (1,129 | ) | $ | (3,709 | ) | $ | (671) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||
Depreciation, depletion, amortization and impairment | 2,091 | 1,406 | 665 | |||||||||
Equity in earnings of Cross Border Resources, Inc. | - | (11 | ) | - | ||||||||
Amortization of debt issuance costs | 510 | 418 | 131 | |||||||||
Accretion of discount on asset retirement obligation | 67 | 15 | 22 | |||||||||
Dividend accrued for mandatorily redeemable preferred stock | 149 | - | - | |||||||||
Unrealized gain on investment in Cross Border Resources, Inc. warrants | - | (230 | ) | - | ||||||||
Change in fair value of commodity derivatives | 382 | - | 105 | |||||||||
Loss on debentures | - | 48 | - | |||||||||
Change in working capital: | ||||||||||||
Accounts receivable - oil and natural gas sales | 883 | 175 | (1,151 | ) | ||||||||
Accounts receivable - other | 1,254 | (157 | ) | 938 | ||||||||
Accounts receivable - related party | - | (20 | ) | - | ||||||||
Prepaid expenses and other assets | 687 | (34 | ) | (304 | ) | |||||||
Accounts payable | (4,733 | ) | 1,679 | 320 | ||||||||
Accrued expenses | (543 | ) | (112 | ) | 37 | |||||||
Net cash provided by (used in) operating activities | (382 | ) | (532 | ) | 92 | |||||||
Cash Flow From Investing Activities: | ||||||||||||
Additions to oil and natural gas properties | (1,494 | ) | (218 | ) | (714 | ) | ||||||
Additions to other property and equipment | (71 | ) | (46 | ) | (34 | ) | ||||||
Settlement of asset retirement obligations | - | (54 | ) | - | ||||||||
Net cash used in investing activities | (1,565 | ) | (318 | ) | (748 | ) | ||||||
Cash Flow From Financing Activities: | ||||||||||||
Proceeds from issuance of common stock, net of issuance costs | 3,605 | - | - | |||||||||
Proceeds from issuance of preferred stock, net of issuance costs | 7,095 | - | - | |||||||||
Proceeds from notes payable | - | 1,000 | - | |||||||||
Payments on line of credit | (5,000 | ) | (42 | ) | - | |||||||
Payments on notes payable | (500 | ) | (65 | ) | - | |||||||
Net cash provided by financing activities | 5,200 | 893 | - | |||||||||
Net change in cash and equivalents | 3,253 | 43 | (656 | ) | ||||||||
Cash at beginning of period | 456 | 168 | 1,112 | |||||||||
Cash at end of period | $ | 3,709 | $ | 211 | $ | 456 | ||||||
Supplemental Disclosure of Cash Flow Information | ||||||||||||
Cash paid during the period for interest | $ | 536 | $ | 167 | $ | 64 | ||||||
Non-Cash Transactions | ||||||||||||
Change in asset retirement obligation estimate | $ | 22 | $ | 21 | $ | 18 | ||||||
Issuance of shares for investment in Cross Border Resources, Inc. | $ | - | $ | 3,737 | $ | - | ||||||
Convertible notes payable derivative liability | $ | - | $ | 300 | $ | - | ||||||
Oil and gas properties included in accounts payable | $ | - | $ | 151 | $ | - | ||||||
Issuance of shares for debentures | $ | - | $ | 63 | $ | - | ||||||
Issuance of shares for equipment | $ | - | $ | 14 | $ | - | ||||||
Issuance of shares for debt issuance costs | $ | - | $ | 161 | $ | - | ||||||
Issuance of warrants with preferred stock | $ | 2,395 | $ | 49 | $ | - |
5 |
Common Stock | ||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Share Subscription Receivable | Noncontrolling Interest | Total | ||||||||||||||||||||||
Balance at May 31, 2012 | 86,932 | 0.869 | 30,548 | (10,079 | ) | (150 | ) | - | 20,320 | |||||||||||||||||||
Issuance of shares in private placement, net of offering costs of $1,351 | 11,597 | 0.116 | 7,290 | - | (100 | ) | - | 7,190 | ||||||||||||||||||||
Issuance of shares for investment in Cross Border Resources, Inc. | 15,734 | 0.157 | 15,236 | - | - | - | 15,236 | |||||||||||||||||||||
Adjustment for consolidation of Cross Border Resources, Inc. | - | - | - | (1,902 | ) | - | 6,359 | 4,457 | ||||||||||||||||||||
Acquisition of additional minority interest in Cross Border Resources, Inc. | 1,174 | 0.012 | 1,438 | - | - | (1,438 | ) | - | ||||||||||||||||||||
Issuance of shares for investment in Cross Border Resources, Inc. subordinated debt | 1,938 | 0.019 | 1,744 | - | - | - | 1,744 | |||||||||||||||||||||
Issuance of shares to settle Cross Border Resources, Inc. bankruptcy claims | 746 | 0.007 | 634 | - | - | - | 634 | |||||||||||||||||||||
Issuance of warrants for investment in warrants of Cross Border Resources, Inc. | - | - | 37 | - | - | - | 37 | |||||||||||||||||||||
Issuance of shares for acquisition of oil and gas properties | 2,375 | 0.024 | 2,232 | - | - | - | 2,232 | |||||||||||||||||||||
Issuance of shares for equipment | 10 | - | 14 | - | - | - | 14 | |||||||||||||||||||||
Issuance of shares for stock issuance liability | 79 | 0.001 | 68 | - | - | - | 68 | |||||||||||||||||||||
Issuance of shares for debentures | 5,698 | 0.057 | 4,782 | - | - | - | 4,782 | |||||||||||||||||||||
Issuance of shares for debt issuance costs | 125 | 0.001 | 161 | - | - | - | 161 | |||||||||||||||||||||
Issuance of warrants for debt issuance costs | - | - | 133 | - | - | - | 133 | |||||||||||||||||||||
Issuance of shares for services | 260 | 0.003 | 229 | - | - | - | 229 | |||||||||||||||||||||
Issuance of shares to brokers | 250 | 0.003 | 212 | - | - | - | 212 | |||||||||||||||||||||
Issuance of warrants to brokers | - | - | 249 | - | - | - | 249 | |||||||||||||||||||||
Issuance of options | - | - | 529 | - | - | - | 529 | |||||||||||||||||||||
Cash received for subscription receivable | - | - | - | - | 250 | - | 250 | |||||||||||||||||||||
Net loss | - | - | - | (12,202 | ) | - | 682 | (11,520 | ) | |||||||||||||||||||
Balance at May 31, 2013 | 126,918 | $ | 1.269 | $ | 65,536 | $ | (24,183 | ) | $ | - | $ | 5,603 | $ | 46,957 |
6 |
Common Stock | ||||||||||||||||||||||||||||
Shares(1) | Amount(1) | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Share Subscription Receivable | Noncontrolling Interest | Total | ||||||||||||||||||||||
Net loss | - | - | - | (631 | ) | - | (40 | ) | (671 | ) | ||||||||||||||||||
Balance at June 30, 2013 | 126,918 | $ | 1.269 | $ | 65,536 | $ | (24,814 | ) | $ | - | $ | 5,564 | $ | 46,287 | ||||||||||||||
Issuance of shares, net of offering costs of $895 | 6,429 | 0.064 | 3,605 | - | - | - | 3,605 | |||||||||||||||||||||
Issuance of warrants with preferred stock | - | - | 2,395 | - | - | - | 2,395 | |||||||||||||||||||||
Net income (loss) | - | - | - | (1,275 | ) | - | 146 | (1,129 | ) | |||||||||||||||||||
Balance at September 30, 2013 | 133,347 | $ | 1.333 | $ | 71,536 | $ | (26,089 | ) | $ | - | $ | 5,710 | $ | 51,158 |
7 |
8 |
9 |
(in thousands) | September 30, 2013 | May 31, 2013 | June 30, 2013 | |||||||||
Oil and natural gas properties: | ||||||||||||
Proved | $ | 66,018 | $ | 63,891 | $ | 64,539 | ||||||
Unproved | 19,659 | 19,539 | 19,622 | |||||||||
Total oil and natural gas properties | 85,677 | 83,430 | 84,161 | |||||||||
Less accumulated depletion and impairment | (11,839 | ) | (9,140 | ) | (9,788 | ) | ||||||
Net oil and natural gas properties capitalized costs | $ | 73,838 | $ | 74,290 | $ | 74,373 |
(in thousands) | September 30, 2013 | May 31, 2013 | June 30, 2013 | |||||||||
Other property and equipment | $ | 1,132 | $ | 1,026 | $ | 1,061 | ||||||
Less accumulated depreciation and amortization | (234 | ) | (184 | ) | (199 | ) | ||||||
Net property and equipment | $ | 898 | $ | 842 | $ | 862 |
(in thousands) | September 30, 2013 | May 31, 2013 | June 30, 2013 | |||||||||
Asset retirement obligations at beginning of period | $ | 5,020 | $ | 836 | $ | 4,979 | ||||||
Liabilities incurred | 7 | 22 | 19 | |||||||||
Liabilities settled | - | (53 | ) | - | ||||||||
Acquisitions | - | 3,728 | - | |||||||||
Accretion expense | 67 | 150 | 22 | |||||||||
Revisions in estimated liabilities | 16 | 296 | - | |||||||||
Asset retirement obligations at end of period | 5,110 | 4,979 | 5,020 | |||||||||
Less: current portion | 228 | 228 | 228 | |||||||||
Long-term portion | $ | 4,882 | $ | 4,751 | $ | 4,792 |
10 |
Commodity and Time Period | Contract Type | Volume Transacted | Contract Price | ||||
Crude Oil | |||||||
October 1, 2013―August 1, 2014 | Collar - Minimum | Option | 437-1,936 Bbls/month | $80.00/Bbl | |||
October 1, 2013―August 1, 2014 | Collar - Maximum | Option | 437-1,936 Bbls/month | $100.50/Bbl | |||
October 1, 2013―December 31, 2013 | Collar - Minimum | Option | 3,808-5,210 Bbls/month | $100.00/Bbl | |||
October 1, 2013―December 31, 2013 | Collar - Maximum | Option | 3,808-5,210 Bbls/month | $109.20/Bbl | |||
October 1, 2013―November 30, 2014 | Swap | 2,000 Bbls/month | $93.50/Bbl | ||||
October 1, 2013―February 28, 2014 | Swap | 1,000 Bbls/month | $106.50/Bbl | ||||
October 1, 2013―March 31, 2014 | Put | 2,000 Bbls/month | $95.00/Bbl |
Balance Sheet Location | Fair Value | |||||||||||||
(in thousands) | September 30, 2013 | May 31, 2013 | June 30, 2013 | |||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||
Commodity derivatives | Commodities derivative asset | $ | - | $ | 265 | $ | 132 | |||||||
Commodity derivatives | Commodities derivative liability | $ | 137 | $ | - | $ | - |
Income Statement Location | Three Months Ended, | One Month Ended, | |||||||||||
September 30, | August 31, | June 30, | |||||||||||
(in thousands) | 2013 | 2012 | 2013 | ||||||||||
Derivatives not designated as hedging instruments | |||||||||||||
Commodity derivatives | Realized loss on commodity derivatives | $ | (88 | ) | $ | - | $ | (14 | ) | ||||
Unrealized loss on commodity derivatives | (296 | ) | - | (90 | ) | ||||||||
$ | (384 | ) | $ | - | $ | (104 | ) |
11 |
● | Level 1 - quoted prices for identical assets or liabilities in active markets. |
● | Level 2 - quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates) and inputs derived principally from or corroborated by observable market data by correlation or other means. |
● | Level 3 - unobservable inputs for the asset or liability. |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices in | Significant or | |||||||||||||||
Active Markets for | Other | Significant | Fair Value at | |||||||||||||
Identical Assets or | Observable | Unobservable | September | |||||||||||||
(in thousands) | Liabilities (Level 1) | Inputs (Level 2) | Inputs (Level 3) | 30, 2013 | ||||||||||||
Assets: | ||||||||||||||||
Commodity derivatives | $ | - | $ | 4 | $ | - | $ | 4 | ||||||||
2009A and 2009B Debentures of O&G Leasing, LLC (nonrecurring) | - | - | 4,279 | 4,279 | ||||||||||||
Total | $ | - | $ | 4 | $ | 4,279 | $ | 4,283 | ||||||||
Liabilities: | ||||||||||||||||
Asset retirement obligations (non-recurring) | $ | - | $ | - | $ | (5,110 | ) | $ | (5,110 | ) | ||||||
Derivative liability | - | (122 | ) | - | (122 | ) | ||||||||||
Environmental remediation liability | - | - | (2,087 | ) | (2,087 | ) | ||||||||||
Total | $ | - | $ | (122 | ) | $ | (7,197 | ) | $ | (7,319 | ) |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices in | Significant or | |||||||||||||||
Active Markets for | Other | Significant | ||||||||||||||
Identical Assets or | Observable | Unobservable | Fair Value at | |||||||||||||
(in thousands) | Liabilities (Level 1) | Inputs (Level 2) | Inputs (Level 3) | May 31, 2013 | ||||||||||||
Assets: | ||||||||||||||||
Commodity derivatives | $ | - | $ | 265 | $ | - | $ | 265 | ||||||||
Oil and gas properties impairment (nonrecurring) | - | - | (411 | ) | (411 | ) | ||||||||||
2009A and 2009B Debentures of O&G Leasing, LLC (nonrecurring) | - | - | 4,279 | 4,279 | ||||||||||||
Total | $ | - | $ | 265 | $ | 3,868 | $ | 4,133 | ||||||||
Liabilities: | ||||||||||||||||
Asset retirement obligations (non-recurring) | $ | - | $ | - | $ | (4,979 | ) | $ | (4,979 | ) | ||||||
Derivative liability | - | (34 | ) | - | (34 | ) | ||||||||||
Environmental remediation liability | - | - | (2,088 | ) | (2,088 | ) | ||||||||||
Total | $ | - | $ | (34 | ) | $ | (7,067 | ) | $ | (7,101 | ) |
12 |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices in | Significant or | |||||||||||||||
Active Markets for | Other | Significant | ||||||||||||||
Identical Assets or | Observable | Unobservable | Fair Value at | |||||||||||||
(in thousands) | Liabilities (Level 1) | Inputs (Level 2) | Inputs (Level 3) | June 30, 2013 | ||||||||||||
Assets: | ||||||||||||||||
Commodity derivatives | $ | - | $ | 132 | $ | - | $ | 132 | ||||||||
2009A and 2009B Debentures of O&G Leasing, LLC (nonrecurring) | - | - | 4,279 | 4,279 | ||||||||||||
Total | $ | - | $ | 132 | $ | 4,279 | $ | 4,411 | ||||||||
Liabilities: | ||||||||||||||||
Asset retirement obligations (non-recurring) | $ | - | $ | - | $ | (5,020 | ) | $ | (5,020 | ) | ||||||
Environmental remediation liability | - | - | (2,088 | ) | (2,088 | ) | ||||||||||
Total | $ | - | $ | - | $ | (7,108 | ) | $ | (7,108 | ) |
(in thousands) | September 30, 2013 | May 31, 2013 | June 30, 2013 | ||||||
Credit Facility | $ | 14,800 | $ | 19,800 | $ | 19,800 | |||
Subordinated Note | - | 500 | 500 | ||||||
Convertible notes payable, net of discount of $69, $442, and $352, respectively | 1,431 | 3,308 | 3,398 | ||||||
Mandatorily redeemable preferred stock and accrued dividends, net of discount of $3.5 million | 8,600 | - | - | ||||||
Total debt | 24,831 | 23,608 | 23,698 | ||||||
Less: short-term portion | 1,431 | 3,808 | 3,898 | ||||||
Long-term debt | $ | 23,400 | $ | 19,800 | $ | 19,800 |
13 |
14 |
15 |
(in thousands) | ||||
Fiscal Years Ending June 30, | ||||
2014 | $ | 1,500 | ||
2015 | 14,800 | |||
2016 | - | |||
2017 | - | |||
2018 | - | |||
2019 | 12,066 | (1) | ||
Total | 28,366 | |||
Discount | (3,535 | ) | ||
Total, net value | $ | 24,831 |
16 |
Three Months Ended | One Month Ended | ||||||||||
September 30, | August 31, | June 30, | |||||||||
(dollars in thousands, except per share amounts) | 2013 | 2013 | 2013 | ||||||||
Net loss (numerator): | |||||||||||
Net loss – basic | $ | (1,129 | ) | $ | (3,709 | ) | $ | (671 | ) | ||
Weighted average shares (denominator): | |||||||||||
Weighted average shares - basic | 129,224 | 87,574 | 126,918 | ||||||||
Dilution effect of share-based compensation, treasury method(1) | - | - | - | ||||||||
Weighted average shares – diluted | 129,224 | 87,574 | 126,918 | ||||||||
Loss per share: | |||||||||||
Basic | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.00 | ) | ||
Diluted | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.00 | ) |
(1) | Approximately 16,535,599 and 4,618,424 shares of common stock underlying a convertible promissory note and warrants to purchase shares of the Company’s common stock were excluded from this calculation because they were anti-dilutive during the periods ended September 30, 2013 and June 30, 2013, respectively. Warrants to purchase approximately 1,617,590 shares of the Company’s common stock were excluded from this calculation because they were anti-dilutive during the period ended August 31, 2012. |
17 |
(in thousands) | ||||
Fiscal Years Ending June 30, | ||||
2014 | $ | 158 | ||
2015 | 177 | |||
2016 | 179 | |||
2017 | 94 | |||
2018 | 16 | |||
Total | $ | 624 |
18 |
19 |
Percentage of | ||||||||||||||||
Gross | Net | Total | ||||||||||||||
Target | Wells | Wells | Cost | Program | ||||||||||||
Tom Tom workovers & new wells | 34.0 | 30.6 | $ | 16.7 | 43 | % | ||||||||||
Cowden | 3.0 | 3.0 | 2.5 | 7 | ||||||||||||
Madera | 5.0 | 2.5 | 18.2 | 47 | % | |||||||||||
Shafter Lake | 1.0 | 0.6 | 0.5 | 1 | % | |||||||||||
Non-operated and other | 3.0 | 0.1 | 0.6 | 2 | % | |||||||||||
Total | 46.0 | 36.8 | $ | 38.5 | 100 | % |
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Three Months Ended | One Month Ended | |||||||||||
September 30, 2013 | August 31, 2012 | June 30, 2013 | ||||||||||
(dollars in thousands, except per unit prices) | ||||||||||||
Revenue | ||||||||||||
Oil and natural gas sales | $ | 5,774 | $ | 1,346 | $ | 1,716 | ||||||
Net Production sold | ||||||||||||
Oil (Bbl) | 43,649 | 12,098 | 18,303 | |||||||||
Natural gas (Mcf) | 241,017 | 142,723 | 71,844 | |||||||||
Total (Boe) | 83,819 | 35,885 | 30,277 | |||||||||
Total (Boe/d) (1) | 911 | 390 | 1,009 | |||||||||
Average sales prices | ||||||||||||
Oil ($/Bbl) | $ | 102.46 | $ | 80.48 | $ | 78.67 | ||||||
Natural gas ($/Mcf) | 4.52 | 2.61 | 4.03 | |||||||||
Total average price ($/Boe) | $ | 68.50 | $ | 37.52 | $ | 57.92 | ||||||
Costs and expenses (per Boe) | ||||||||||||
Exploration expense | $ | 1.21 | $ | 0.53 | $ | 1.00 | ||||||
Production taxes | 7.23 | 2.37 | 4.24 | |||||||||
Lease operating expenses | 8.91 | 10.20 | 20.95 | |||||||||
Natural gas transportation and marketing expenses | 0.45 | 0.64 | 1.66 | |||||||||
Depreciation, depletion, amortization and impairment | 24.94 | 39.18 | 21.95 | |||||||||
Accretion of discount on asset retirement obligation | 0.80 | 0.42 | 0.72 | |||||||||
General and administrative expense | 23.19 | 73.93 | 17.41 |
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Payments Due by Period | ||||||||||||||||||||
Total | Less than 1 Year | 1 – 3 Years | 3 – 5 Years | More than 5 Years | ||||||||||||||||
Credit Facility | $ | 16,231 | $ | 592 | $ | 15,639 | $ | - | $ | - | ||||||||||
Series A Preferred Stock | 18,233 | 804 | 3,218 | 14,211 | - | |||||||||||||||
Convertible note payable | 1,781 | 1,781 | - | - | - | |||||||||||||||
Environmental remediation liability | 2,088 | 1,400 | - | 688 | - | |||||||||||||||
Asset retirement obligations | 5,110 | 228 | - | - | 4,882 | |||||||||||||||
Lease obligations | 624 | 158 | 356 | 110 | - | |||||||||||||||
Total | $ | 44,067 | $ | 4,963 | $ | 19,213 | $ | 15,099 | $ | 4,882 |
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● | our ability to raise additional capital to fund future capital expenditures; |
● | our ability to generate sufficient cash flow from operations, borrowings or other sources to enable us to fully develop and produce our oil and natural gas properties; |
● | declines or volatility in the prices we receive for our oil and natural gas; |
● | general economic conditions, whether internationally, nationally or in the regional and local market areas in which we do business; |
● | risks associated with drilling, including completion risks, cost overruns and the drilling of non-economic wells or dry holes; |
● | uncertainties associated with estimates of proved oil and natural gas reserves; |
● | the presence or recoverability of estimated oil and natural gas reserves and the actual future production rates and associated costs; |
● | risks and liabilities associated with acquired companies and properties; |
● | risks related to integration of acquired companies and properties; |
● | potential defects in title to our properties; |
● | cost and availability of drilling rigs, equipment, supplies, personnel and oilfield services; |
● | geological concentration of our reserves; |
● | environmental or other governmental regulations, including legislation of hydraulic fracture stimulation; |
● | our ability to secure firm transportation for oil and natural gas we produce and to sell the oil and natural gas at market prices; |
● | exploration and development risks; |
● | management’s ability to execute our plans to meet our goals; |
● | our ability to retain key members of our management team; |
● | weather conditions; |
● | actions or inactions of third-party operators of our properties; |
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● | costs and liabilities associated with environmental, health and safety laws; |
● | our ability to find and retain highly skilled personnel; |
● | operating hazards attendant to the oil and natural gas business; |
● | competition in the oil and natural gas industry; and |
● | the other factors discussed under Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2013. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
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Commodity and Time Period | Contract Type | Volume Transacted | Contract Price | ||||
Crude Oil | |||||||
October 1, 2013―August 1, 2014 | Collar - Minimum | Option | 437-1,936 Bbls/month | $80.00/Bbl | |||
October 1, 2013―August 1, 2014 | Collar - Maximum | Option | 437-1,936 Bbls/month | $100.50/Bbl | |||
October 1, 2013―December 31, 2013 | Collar - Minimum | Option | 3,808-5,210 Bbls/month | $100.00/Bbl | |||
October 1, 2013―December 31, 2013 | Collar - Maximum | Option | 3,808-5,210 Bbls/month | $109.20/Bbl | |||
October 1, 2013―November 30, 2014 | Swap | 2,000 Bbls/month | $93.50/Bbl | ||||
October 1, 2013―February 28, 2014 | Swap | 1,000 Bbls/month | $106.50/Bbl | ||||
October 1, 2013―March 31, 2014 | Put | 2,000 Bbls/month | $95.00/Bbl |
Item 4. |
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We will need to raise additional capital to fully fund our planned exploration and development activities for fiscal 2014.
We plan to spend approximately $38.5 million during the remainder of fiscal 2014 to drill and complete wells or re-enter and complete wells, most of which will be spent in the Permian Basin. As of November 18, 2013, we do not have sufficient funds for our planned fiscal 2014 exploration and development activities and will need to raise between $5.0 million and $15.0 million to fully fund our fiscal 2014 development plan. If we are unable to raise these additional funds, we may be forced to curtail or suspend our planned exploration and development activities.
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Item 6. | Exhibits | |
3.1 | Articles of Incorporation of Red Mountain Resources, Inc. (f/k/a Teaching Time, Inc.) (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (File No. 333-164968), filed with the SEC on February 18, 2010). | |
3.2 | Articles of Amendment to Articles of Incorporation of Red Mountain Resources, Inc. (f/k/a Teaching Time, Inc.) (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 23, 2011). | |
3.3 | Articles of Correction for Red Mountain Resources (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on March 23, 2011). | |
3.4 | Articles of Amendment to Articles of Incorporation of Red Mountain Resources, Inc. (incorporated by reference to Exhibit 3.4 to the Company’s Registration Statement on Form 8-A filed on July 24, 2013). | |
3.5 | By-Laws of Red Mountain Resources, Inc. (f/k/a Teaching Time, Inc.) (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File No. 333-164968), filed with the SEC on February 18, 2010). | |
10.1 | Form of Warrant Agreement between the Company and Broadridge Corporate Issuer Solutions, Inc. (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form 8-A filed on July 24, 2013). | |
10.2* | Amendment and Consent, dated July 19, 2013, to that certain Senior First Lien Secured Credit Agreement, dated February 5, 2013, among the Company, Cross Border Resources, Inc., Black Rock Capital, Inc. and RMR Operating, LLC, as borrowers, and Independent Bank, as lender. | |
10.3* | Amendment No. 1, dated July 30, 2013, to that certain Unsecured Subordinated Promissory Note, dated February 6, 2013, issued by the Company in favor of Hyman Belzberg, William Belzberg and Caddo Management, Inc. | |
10.4 | Amendment and Waiver, effective as of September 12, 2013, by and among Independent Bank, as lender, and the Company, Cross Border Resources, Inc., Black Rock Capital, Inc. and RMR Operating, LLC, as borrowers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 17, 2013). | |
31.1* | Certification of the Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of the Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1** | Certification of the Chief Executive Officer and Chief Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
** | Furnished herewith. |
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By: | /s/ Alan W. Barksdale | |
Alan W. Barksdale | ||
Chief Executive Officer | ||
By: | /s/ Michael R. Uffman | |
Michael R. Uffman | ||
Chief Financial Officer | ||
Date: November 18, 2013 |
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3.1 | Articles of Incorporation of Red Mountain Resources, Inc. (f/k/a Teaching Time, Inc.) (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (File No. 333-164968), filed with the SEC on February 18, 2010). | |
3.2 | Articles of Amendment to Articles of Incorporation of Red Mountain Resources, Inc. (f/k/a Teaching Time, Inc.) (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 23, 2011). | |
3.3 | Articles of Correction for Red Mountain Resources (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on March 23, 2011). | |
3.4 | Articles of Amendment to Articles of Incorporation of Red Mountain Resources, Inc. (incorporated by reference to Exhibit 3.4 to the Company’s Registration Statement on Form 8-A filed on July 24, 2013). | |
3.5 | By-Laws of Red Mountain Resources, Inc. (f/k/a Teaching Time, Inc.) (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File No. 333-164968), filed with the SEC on February 18, 2010). | |
10.1 | Form of Warrant Agreement between the Company and Broadridge Corporate Issuer Solutions, Inc. (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form 8-A filed on July 24, 2013). | |
10.2* | Amendment and Consent, dated July 19, 2013, to that certain Senior First Lien Secured Credit Agreement, dated February 5, 2013, among the Company, Cross Border Resources, Inc., Black Rock Capital, Inc. and RMR Operating, LLC, as borrowers, and Independent Bank, as lender. | |
10.3* | Amendment No. 1, dated July 30, 2013, to that certain Unsecured Subordinated Promissory Note, dated February 6, 2013, issued by the Company in favor of Hyman Belzberg, William Belzberg and Caddo Management, Inc. | |
10.4 | Amendment and Waiver, effective as of September 12, 2013, by and among Independent Bank, as lender, and the Company, Cross Border Resources, Inc., Black Rock Capital, Inc. and RMR Operating, LLC, as borrowers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 17, 2013). | |
31.1* | Certification of the Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of the Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1** | Certification of the Chief Executive Officer and Chief Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
** | Furnished herewith. |
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